Before The Bell - Wall Street soon will start a new week following an up-and-down five day span, which saw the leading equity averages surge at the outset and fade by the close. This uneven pattern reflected good news very early in the week, as drug maker Moderna (MRNA) followed pharmaceuticals giant Pfizer (PFE) in announcing a vaccine to prevent COVID-19. Then, as the week proceeded, the realization that until there is mass distribution of these vaccines, which may not happen until well into the spring, the market will face soaring cases of this disease.
As for the coronavirus, daily cases are surging toward 200,000 and deaths are on track for 2,000 a day. The sharp rise in infections is raising the threat of looming closures and business failures. Meantime, after the early week surge, which brought the Dow Jones Industrial Average to a record high just shy of 30,000, the Dow settled back to end the week at 29,263. All told, the blue chips would suffer a modest decline for the week. The S&P 500 also would end lower, while the tech heavy NASDAQ would fashion a small gain for the five days.
Meanwhile, it was not just rising COVID-19 cases that dampened bullish enthusiasm late in the week, but there also were questions about Federal Reserve funding for key emergency programs. In addition to such lead bank concerns, there are worries about the fast-spreading coronavirus, which has caused some states to roll back reopening plans and to implement fresh restrictions to curb the spread of the infections. The approach of the Thanksgiving holiday is also raising the level of COVID-19 fears. Pressures on GDP likely will follow all of this.
So here we are as we look out to a new week, with soaring coronavirus cases and programs set to expire. In fact, millions of Americans soon could lose unemployment benefits, while new weekly jobless filings remain uncomfortably high at some three quarters of a million individuals. Worse, unless a divided Congress can reach a deal to extend key programs, the economic suffering and the financial toll of this disease could explode upwards. There clearly is a lot of risk to be endured at this point.
Now, we face a new week and additional challenges. There also will be some critical reports out in the coming days, including data on Consumer Confidence due out Tuesday morning. Other major issuances in this holiday shortened Thanksgiving week will be the second look at third-quarter GDP on Wednesday, as well as figures on orders for durable goods for October. Personal income data, a survey on consumer spending, and the minutes from the last Federal Open Market Committee meeting also will be out. So, it should be a busy few days.
Ahead of all this, and after some early strength in the futures last evening, the stock market now seems set to open the new week strongly to the upside. The apparent reason for this indicated early strength is news, issued early this morning, that AstraZeneca (AZN), along with the University of Oxford, has joined Pfizer and Moderna in announcing a vaccine to prevent COVID-19. This vaccine is said to be 90% effective. AZN shares are indicated higher along with the rest of the market. – Harvey S. Katz, CFA